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Lord Mackay of Ardbrecknish: My Lords, with the leave of the House I should now like to repeat a Statement made earlier today in another place by my right honourable friend the Secretary of State for Social Security. The Statement is as follows:
"But the whole House has also had growing concerns about the practical application of that principle and the operations of the agency. I responded rapidly to early concerns by introducing reforms last February. I promised then to keep the system under review, and I committed the Government to respond positively to the Social Security Select Committee's second report. In the light of that report and the experience of the first year and a half I am persuaded that further significant change is required.
"The proposals in the White Paper incorporate the majority of the Select Committee's recommendations, and in some cases they go further. Altogether, I believe our proposals will enable the system to achieve its original purpose. They will make maintenance assessments fairer, improve the service offered by the agency, and ensure that maintenance assessed becomes maintenance paid. I believe that that is what Parliament wants.
"The major focus of criticism of the Child Support Act relates to past settlements of property or capital. Some of those criticisms are based on misconceptions. However much property was transferred, there never could be a 'clean break' from your children. Parents or the state always could return to court to seek increased child maintenance. Also the current formula does indirectly reflect property transfers. Nonetheless, it is true that the formula does not explicitly reflect the value of property or capital transfers which were intended to contribute to child maintenance. To establish how much of any past
"To give the agency and appeal tribunals discretion to amend assessments to reflect past property settlements will require primary legislation. I therefore intend to bring in a Bill in the current Session. But primary legislation means the new arrangements cannot be up and running before 1996-97. And I want to give some recognition now. So I propose, from this April, to introduce into the formula a 'broad brush' allowance for past property transfers. It will assume half the equity belonged to each partner. Where the absent parent transferred more than £5,000 of his share of the equity there will be set allowances in the formula for amounts falling in three broad bands. A parent who finds that the 'broad brush' allowance does not sufficiently reflect his property settlement may seek a departure from the formula under the new discretionary powers.
"I also propose to allow strictly limited discretion to prevent hardship by taking account of some other expenses that are not in the formula. These will include high costs of visiting children, extra costs of supporting a disabled dependant, exceptional costs of caring for stepchildren and certain debts of the former relationship.
"Madam Speaker, I also intend to make a number of amendments to the maintenance formula. First, I want to encourage people to continue working even where they have to travel long distances. Calculating actual travel costs would be burdensome for everyone. So instead, for parents who live more than 15 miles from their place of employment, I will introduce a 'broad brush' allowance. An automatic calculation will avoid the need for detailed inquiries to be made about actual travel costs. If this works out much too high or too low either parent will in due course be able to apply for a discretionary adjustment.
"Thirdly, I shall put a ceiling on assessments of 30 per cent. of net income, (or the minimum payment of £2.30), so absent parents will be able to keep at least 70 per cent. of their net income after paying maintenance. And even those who are also paying off arrears will be allowed to keep at least two-thirds of normal net income. This reassurance goes beyond anything recommended by the Social Security Select Committee, and I am sure that it will be welcomed by the House.
"Madam Speaker, most of the measures that I have announced will make assessments fairer for absent parents. Indeed, no absent parent will now be able reasonably to refuse to pay their child maintenance. As a result, these measures will also help parents with care and their children by securing maintenance more speedily. Even where maintenance already being paid is reduced as a result of these changes, parents with care on income support will not lose money, since income support is adjusted immediately. However, awards of family credit and disability working allowance are set for six months. For those whose maintenance drops because of the changes, the Government will provide some compensation for the rest of the award period.
"Some commentators have argued for maintenance to be disregarded in calculating income support. But that would make it much more difficult for a parent with care to improve her family's standard of living by returning to work. Instead, I propose that parents with care who are on income support or jobseeker's allowance will be able to build up a new maintenance credit of up to £5 a week. This will be paid as a lump sum when they start work. It will give parents with care an increased interest in receiving maintenance and enhance their incentive to work.
"Madam Speaker, the Child Support Agency has performed less well than I would wish, in spite of hard work by its staff. But the agency has already taken steps to improve its performance. In December, the agency announced two measures to help it manage its outstanding cases. These involved deferring the take-on of parents with care on income support who have not asked or provided sufficient information for the agency to pursue maintenance. All parents with care who continue on benefit will, in due course, be taken on by the agency. And there is no question of deferring action against unco-operative absent parents.
"Nonetheless, the policy changes announced today will impose further work on the agency. I do not want the agency to add unnecessarily to its backlog, but to devote its resources to its current workload. Cases where there was a court order or maintenance agreement before April 1993 and the parent with care is not on benefit were due to have access to the agency at the initiative of either parent from 1996. I now propose to defer take-on of these cases. I will ensure they retain the right to use the courts. And I will also give them the right for a fee to use the agency's collection and enforcement service.
"Some absent parents have suffered through no fault of their own from delays in making assessments, resulting in huge bills for arrears. In these cases, we will not enforce more than six months' arrears, provided that the absent parent agrees to pay them and to pay his ongoing liability for maintenance. After a year, it will be clear whether the absent parent is meeting his obligation and, if so, we shall compensate the parent with care for any financial loss. I have decided to stop charging fees and interest
"On Thursday I intend to lay a set of minor technical amendments to regulations, which will further help the administration of the scheme. Many of the changes that I am announcing today will take effect from this April. The formula will change, interest payments will be abolished and fees will be suspended. The agency will be writing to all its clients about these changes. There is no need for parents to contact the agency. Primary legislation is needed to introduce discretion into the maintenance formula and for other changes including deferring take on of non-benefit cases. Subject to the approval of Parliament, these changes will take effect during 1996-97. From April 1997 the new maintenance credit scheme and late payment penalties will start and fees will be re-introduced. None of these changes will apply retrospectively.
"Madam Speaker, legislation involving children, broken families and money will always arouse strong emotions. This is certainly the experience of Australia's Child Support Agency even after six years of operation. But I believe these changes will improve our child support scheme for both parents. They will take account of property or capital settlements, give flexibility to prevent hard cases, allow for high travel-to-work costs, help absent parents with step-families, reduce the maximum level of maintenance and ensure that absent parents normally keep more than 70 per cent. of their net income after paying maintenance. These changes should encourage and enable more absent parents to pay child maintenance regularly. As a result, they will give more parents with care and their children the chance of a better life. I commend them to the House".
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